Class Action for Failure to Follow Fair Credit Reporting Act for Employment Screening Settles for $4.3 Million

In a case that once again emphasizes the importance of employers following the federal Fair Credit Reporting Act (FCRA) for employment screening, attorneys for thousands of mass-transit drivers and school bus drivers announced approval of a class action settlement of 4.3 million dollars for failure to adhere to the requirements of the FCRA. The proposed settlement was approved by a federal Judge in Illinois stemming from a national class-action suit involving allegations of FCRA violations against sister companies that employed drivers. 

According to the press release, the suit alleged that the two companies – both subsidiaries of a company in Great Britain – obtained criminal background checks on drivers and job applicants without their written authorization and in some cases denied them jobs without providing them a copy of their criminal background report in violation of the federal FCRA law. The FCRA requires that all background checks be conducted with consent and that in the case an adverse employment action occurring as a result of a background check, the applicant is entitled to certain notifications including a copy of the report.

The overall settlement was for $5.9 million, with $4.3 million going to the class action and the court awarding an additional $1.6 million for court costs and attorneys fees. According to a spokeswoman for the law firm that filed the suit, the settlement was the largest ever involving employment-related Fair Credit Reporting Act claims. Under the terms of the proposed settlement as reported in the press:

  • Each worker terminated by either company based on an unauthorized criminal background check report could receive $2,000 to $4,000.
  • Each worker terminated by either company based on a criminal background check report without first receiving a copy of that report will receive $750.
  • Each worker who was the subject of an unauthorized criminal background report, but who continued to work for either company, likely will receive between $150 and $300.

According to the press release about the initial suit, the largest labor organization representing transit workers in the United States filed the two separate class actions in federal district courts in Illinois for violation of their legal rights under the Fair Credit Reporting Act. In each case, workers were dismissed from employment after the subsidiary companies hired a vendor to perform background checks on their employees and reported that the employee supposedly had a past criminal record.

Under the Fair Credit Reporting Act, employers are obliged to notify consumers of any adverse actions as a result of a background check, and to give the consumers a reasonable opportunity to dispute the accuracy of the reported information. The lawsuits sought relief for all employees summarily dismissed – and all applicants similarly refused employment – on the basis of a background check.

This case once again demonstrates that the process of obtaining background checks is highly legally relegated, and that employers and background firms need to pay strict attention to all of the various legal rules affecting hiring, including the FCRA. The court document may be viewed at: http://www.workplaceclassaction.com/First%20transit%20settlement%20agrement.pdf.

For more information on how employers should follow the FCRA, read the article ‘Complying with the Fair Credit Reporting Act (FCRA) in Four Easy Steps’ at: http://www.esrcheck.com/articles/Complying-with-the-Fair-Credit-Reporting-Act.php. For more information about background checks, visit Employment Screening Resources (ESR) at http://www.ESRcheck.com.

Sources:

http://news.cincinnati.com/article/20110317/BIZ01/303170095/1071/SPT04/First-Group-affiliates-settle?odyssey=nav%7Chead

http://www.prnewswire.com/news-releases/bus-drivers-file-class-action-suits-against-first-group-63531807.html

http://www.workplaceclassaction.com/First%20transit%20settlement%20agrement.pdf

http://classactionlawsuitsinthenews.com/class-action-settlements/first-group-america-first-transit-and-first-student-class-action-settlement-of-fair-credit-reporting-act-fcra-class-action-lawsuit/

Tags: FCRA, Court Cases